Economic analysis of commercial rice drying in Texas

Abstract

Increased production and shorter harvesting seasons necessitated a greater drying capacity in the Texas rice industry in recent years. This study attempts to determine the most economical drying system and the economic optimum rice temperature for drying rice in the next few years. Projections of the 1975 crop size have been taken for estimating the appropriate capacity needed by then for Texas. Off-farm commercial driers handle most of the crop, and these have been considered in this study. Budgeting techniques and net profit analysis under the basic framework of production functions and cost and revenue functions have been used in this study. Budgets have been constructed for different levels of rice temperature under each of the following three systems of drying: 1. Complete drying with lot identity preserved: System 1; 2. Partial drying with lot identity preserved: System 2; 3. Complete drying with comingling and lot identity lost: System 3. Both secondary and primary data have been used in this study - primary data with respect to present off-farm drying capacity and with respect to the practice of drying were collected by a mailed questionnaire survey and personal interview. All secondary data as required have been adjusted by the appropriate index numbers. It has been found that operating costs of drying as well as revenue per hundredweight of rice dried increase when drying is done at lower rice temperatures, but the rate of increase in revenue is greater than the rate of increase in costs as long as rice temperature increases milling yields. Revenue increases by 0.262 cents per hundredweight and cost increases by .095 cents per hundredweight for one degree decrease in rice temperature.